Industry News

Personal Bankruptcy Filings Continue To Rise in Fiscal Year 2003

November 19, 2003

The Federal Government Fiscal Year 2003 (October 1, 2002 - September 31, 2003) saw the number of personal or non-business bankruptcies filed in federal court continue to increase, while business bankruptcy filings declined. Total bankruptcy filings, according to the Administrative Office of the U.S. Courts, remain at historic highs. Bankruptcy filings and the demands they make on court resources continue to rise at a time when federal courts are facing little or no growth in their fiscal year 2004 budget. The federal Judiciary's fiscal year is the 12-month period ending September 30. The bankruptcies reported are for October 1, 2002 ? September 30, 2003 .

There were 1,661,996 bankruptcies filed in Fiscal Year 2003, up 7.4 percent from the 1,547,669 filings in Fiscal Year 2002. This is the highest ever total of filings for any reporting period. Since 1994, when filings totaled 837,797, bankruptcies in federal courts have increased 98 percent.

Business and Non-Business Filings

Business bankruptcies fell 7.4 percent to 36,183 in FY 03, down from 39,091 in FY 02. Non-business or personal bankruptcies grew 7.8 percent in the same 12-month period, totaling 1,625,813 in FY 03 and 1,508,578 in FY 02. Non-business bankruptcies now account for 97.8 percent of all bankruptcies filed in federal courts.

Filings Under Chapters 7, 12 and 13 Increase

In FY 03, filings under Chapters 7, 12 and 13 of the Bankruptcy Code increased. Only Chapter 11 filings fell below FY 02 totals.

• Chapter 7 is designed to allow individuals to keep certain exempt property while the remaining property is sold to repay creditors. Chapter 7 filings in FY 03 totaled 1,177,292, up 8.6 percent from the 1,084,336 filings in FY 02.
• Chapter 12 is designed to meet the needs of financially distressed family farmers. In FY 03, Chapter 12 filings totaled 698, rising 116.8 percent from the 322 cases filed in FY02. This surge in filings mostly likely arose from the retroactive extension of provisions for filing under this chapter, which has occurred several times since provisions for filing under chapter 12 first expired in 2000.
• Under Chapter 13 bankruptcy, creditors may be repaid in installments, in full or in part, over a 3- to 5-year period. Filings under Chapters 13 in FY 03 rose 5 percent to 473,763, up from 451,258 in FY 02.
• Chapter 11 filings totaled 10,144 in FY 03, down 13 percent from the 11,669 filings in FY 02. Chapter 11 provides for a business to continue operations while formulating a plan to repay its creditors.

Fourth Quarter Filings

The three month period ending September 30, 2003 , was the Judiciary's final quarter of FY 2003. Bankruptcy filings in the fourth quarter totaled 412,989. The number of bankruptcy cases filed during the third quarter of the Judiciary's 2003 fiscal year ( April 1, 2003 ? June 30, 2003 ) totaled 440,257. Second quarter bankruptcies ( January 1, 2003-March 31, 2003) totaled 412,968 and filings for the Judiciary's first quarter of 2003 (October 1, 2002 - December 31, 2002 ) totaled 395,129.

For more information on bankruptcy visit the Judiciary's website at www.uscourts.gov/ bankbasic.pdf. Local bankruptcy court rules can be found at www.uscourts.gov/rules/bk-localrules.html. A breakdown of the latest data on bankruptcy filings follows and also is available on the Judiciary's website at www.uscourts.gov under Newsroom.

Source: Administrative Office of the U.S. Court

Contact ALTA at 202-296-3671 or communications@alta.org.